Morgan Stanley 3Q17

So I was on a phone call with a client yesterday. His adviser left to a competitive firm, a multi-hundred million dollar relationship. We have a significant loan out to that client. And the client has no interest in moving because they like the loan that we have. They like the funding they’re getting from that. They — in fact, after the call, he said they were likely to increase their assets here. So that stickiness for the high end is a big deal. These markets go in cycles as we all know. And people want access to credit. They have large illiquid positions, so concentrated stock in businesses they founded, and they don’t necessarily want to liquidate that. And we’re in a position where we’re dealing with a lot of very, very wealthy people.
Jonathan Pruzan – CFO & Executive VP

Cash at low levels

. It happened a bit sooner than we anticipated as we saw more cash go into the markets, particularly the equity markets as those markets rose around the world. And we’ve seen cash in our clients’ accounts at its lowest level.

Environment won’t last forever

think the underlying fundamentals sort of the global recovery, if you will, are pretty positive. But we haven’t seen real dramatic changes in the rate profile. The 10-year treasury rebounded a little bit here recently. But given the geopolitical risk and the persistently low inflation numbers, it’s a pretty tight trading band, FX rates, tight trading band, credit spreads, tight trading band. So again, I don’t think it’s structural. I think it’s cyclical at this point. At some point, there will be catalysts to change the direction of the trading environment, and whether that’s tax policy, whether that’s better inflation data. But there will be something. And so this has been a sort of a subdued environment. I don’t think it persists forever. But when and how that catalyst appears is clearly a question mark.